Heuristics on Call: The Impact of Mobile Phone Based Business Management Advice

Abstract

There is growing evidence that business training for micro-entrepreneurs can be effective. Typically, such training is offered in-person and is thus often expensive to deliver and imposes significant burden on participants as well. This paper reports on a two-site randomized control trial, which evaluates the efficacy of mobile-phone based business training for micro-entrepreneurs. Partnering with microfinance institutions in India and the Philippines, we deliver a weekly audio message for 21 weeks (in the Philippines) and 22 weeks (in India), covering the following topics: Cash separation (profit calculation), Customer credit, Inventory management, and Supplier management. Our preferred estimates find significant positive effects of these messages on business practices, suggesting mobile phones can be an effective medium for imparting training on business practices. We do not, however, have enough power to detect any impact on profitability or sales. The coefficients on these variables tend to be big but so are the standard errors.

Keywords: Business training, micro-entrepreneurs, rules of thumb